ITT (ITT) versus Xylem (XYL) Critical Survey

ITT (NYSE: ITT) and Xylem (NYSE:XYL) are both multi-sector conglomerates companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, profitability, dividends and earnings.

Insider & Institutional Ownership

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94.2% of ITT shares are owned by institutional investors. Comparatively, 86.0% of Xylem shares are owned by institutional investors. 1.0% of ITT shares are owned by insiders. Comparatively, 0.8% of Xylem shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

ITT pays an annual dividend of $0.54 per share and has a dividend yield of 1.1%. Xylem pays an annual dividend of $0.84 per share and has a dividend yield of 1.1%. ITT pays out 20.8% of its earnings in the form of a dividend. Xylem pays out 35.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. ITT has increased its dividend for 5 consecutive years and Xylem has increased its dividend for 5 consecutive years.

Volatility & Risk

ITT has a beta of 1.55, suggesting that its share price is 55% more volatile than the S&P 500. Comparatively, Xylem has a beta of 1.1, suggesting that its share price is 10% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and recommmendations for ITT and Xylem, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ITT 1 1 8 0 2.70
Xylem 0 3 8 0 2.73

ITT presently has a consensus target price of $55.75, suggesting a potential upside of 9.16%. Xylem has a consensus target price of $73.00, suggesting a potential downside of 7.91%. Given ITT’s higher probable upside, equities analysts plainly believe ITT is more favorable than Xylem.

Profitability

This table compares ITT and Xylem’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ITT 4.39% 14.65% 6.18%
Xylem 7.03% 17.95% 6.44%

Valuation and Earnings

This table compares ITT and Xylem’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
ITT $2.59 billion 1.74 $113.50 million $2.59 19.72
Xylem $4.71 billion 3.03 $331.00 million $2.40 33.03

Xylem has higher revenue and earnings than ITT. ITT is trading at a lower price-to-earnings ratio than Xylem, indicating that it is currently the more affordable of the two stocks.

Summary

Xylem beats ITT on 9 of the 15 factors compared between the two stocks.

ITT Company Profile

ITT Corporation (ITT) is a diversified manufacturer of engineered critical components and technology solutions for industrial markets. The Company’s product and service offerings are organized in four segments: Industrial Process, Motion Technologies, Interconnect Solutions and Control Technologies. Industrial Process manufactures engineered fluid process equipment, and is a provider of plant optimization, solutions and aftermarket services and parts. Motion Technologies manufactures brake components, shock absorbers and damping technologies for the automotive, truck and trailer, public bus and rail transportation markets. Interconnect Solutions manufactures and designs a range of engineered connector solutions that makes it possible to transfer signal and power between electronic devices. Control Technologies manufactures equipment, including actuation, valves, and noise and energy absorption components for the aerospace and defense, and industrial markets.

Xylem Company Profile

Xylem Inc. engages in the design, manufacture, and service of engineered solutions for the water and wastewater applications. It operates through three segments: Water Infrastructure, Applied Water, and Measurement and Control Solutions. The Water Infrastructure segment offers various products, including water and wastewater pumps, and controls and systems, as well as filtration, disinfection, and biological treatment equipment under the Flygt, Godwin, Wedeco, Sanitaire, and Leopold names for the transportation, treatment, and testing of water and wastewater applications. The Applied Water segment provides pumps, valves, heat exchangers, controls, and dispensing equipment systems under the Goulds Water Technology, Bell & Gossett, A-C Fire Pump, Standard Xchange, Lowara, Jabsco, and Flojet brand names for residential and commercial building services, and industrial water applications. The Measurement and Control Solution segment provides smart metering, communications, measurement, and control technologies and services that allow customers to use their distribution networks for the delivery of critical resources, such as water, electricity, and natural gas. This segment also offers software and services, including cloud-based analytics, remote monitoring, data management, leak detection, and pressure monitoring solutions, as well as sells smart lighting products and solutions. This segment sells products under the Sensus, Smith Blair, WTW, Visenti, and YSI brand names. The company markets and sells its products through a network of direct sales force, resellers, distributors, and value-added solution providers in the United States, Europe, the Asia Pacific, and internationally. Xylem Inc. is headquartered in Rye Brook, New York.

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